How to Hire a Contractor
Posted by RealEstate_Guru
Over the time you own your home, it’s very likely that you’re going to need to have some work done. If you’re an avid DIYer, that’s great, but many of us don’t have the skills or the time to undertake complex projects. The natural choice, then, is to hire a contractor. This always isn’t as easy as it seems. Here are some guidelines to help you choose the best contractor for the job.
Getting Ready
When you’re considering a major project, be sure you understand the reasons for doing so. For many people, improvements are done to add value and functionality to the home. You should approach the process thoughtfully and with plenty of common sense. If you’ve decided to use a contractor, it’s important to find one with the right qualifications for your specific project. One of the best ways to locate a contractor is to get recommendations from family and friends. It’s also a good idea to check with the National Association of the Remodeling Industry (NARI) to learn about any certifications the contractor might hold, such as a certified remodeler (CR) or a certified remodeler specialist (CRS). NARI’s certification programs recognize the achievements and skills of nine distinct categories of remodeling professionals that are of particular interest to homeowners. For more information, visit http://www.nari.org.
Do Phone Interviews
Once you’ve narrowed the field down to a few contractors, telephone each one and ask a series of relevant questions. Be sure to find out how long they’ve been working in the field and whether they’re willing to provide references, both from homeowners they’ve worked for and financial references from banks or suppliers. This can tell you a lot about how the contractor does business. If the project is large or extensive, make sure that the contractor has experience in projects of its type and size. One question homeowners often forget to ask is how many other projects the contractor will be working on, along with theirs. If possible, try to make sure your project gets the contractor’s full attention. Most contractors use subcontractors, so ask how long the one you’re considering has worked with theirs. The answers you get will give you a good picture of the contractor’s availability and reliability, as well as a sense of how smoothly the work will go.
Meet the Contractor in Person
Pick two or three contractors, based on the telephone interviews. Meet with them in person to explain your project and get an estimate. The contractor should be willing to address your concerns and answer all questions in detail. The best contractors will put you at ease and engender your confidence. Good communication is essential. Even the best contractor needs to be able to explain their approach and the tools and techniques they’ll be using on the project. The contractor should project a professional and competent image. Be sure to check with your state’s consumer protection agency or your local Better Business Bureau to be sure the contractor has a good track record of finishing jobs on time, and within the allotted budget. Try to learn whether the contractor has a history of disputes, either with subcontractors or clients. If you can do so, visit one of the contractor’s current job sites to see how he works. The job site should be neat and clean, and the workers should be courteous and careful with the homeowner’s property.
Get Competitive Bids
Once you’ve narrowed the field, it’s time to get bids. The contractor should want a set of blueprints and also should have a clear sense of what you’re expecting from the project. When obtaining bids, ask all contractors to cost out materials, labor, profit margin and other relevant expenses. Material usually accounts for about 40% of the project’s total cost. A typical profit margin is between 15% and 20%. The rest covers overhead. Also, ask for a payment schedule and beware of contractors who want a huge percentage of the cost up front. A typical payment schedule would be 10% paid when the contract is signed, and then 3 payments of 25% evenly spaced over the length of the project. The remaining 15% is paid when the project’s completed to your satisfaction. If a bid seems excessively low, don’t consider it, because it’s likely the contractor will cut corners, or is desperate for work. The single most important factor in choosing a contractor is how well he communicates and how comfortable you are with him.
Get a Written Contract
Draw up a written contract that details every step of the project, such as the payment schedule. The contractor also should submit proof that he has liability insurance and workers compensation insurance. Be sure the contract includes a start date and projected completion date. It should list the specific products and materials that will be used. The contract should contain an assurance that the contractor will get lien releases from all subcontractors and suppliers. These are designed to protect you if he doesn’t pay his bills.
Insisting on a clear contract doesn’t mean you distrust the contractor. It’s necessary to ensure that the project is successfully completed.
Buying a Fixer Upper – Part 1
Posted by RealEstate_Guru
Today’s real estate climate presents many opportunities for buyers. But what if your budget is strictly limited? There still is a great way to get into a home of your own without causing financial hardship. Have you considered buying what’s called a “fixer upper?” These homes are in need of some work and plenty of TLC. If you’re a first-time homeowner, buying a fixer upper is likely to be an affordable option because the price will be much lower. When should you consider this type of home? The best time is when the housing market in your area doesn’t have an extended inventory of properties available for sale, especially new homes and homes in top condition. Buyers on a budget are likely to get squeezed out unless they’re able to do some creative thinking about the sort of home they can afford.
What to Consider When Buying a Fixer Upper
When planning to buy their first home, many people fail to budget for some of the extra expenses they’re likely to encounter. Although everyone budgets for the mortgage payment, down payment, insurance and taxes, more than a few sometimes fail to include the everyday repairs and maintenance every property needs. Examples are plumbing and roof repairs, major appliance repairs or acquisition, central heating and air conditioning upgrades or repairs, and a host of others. Even if these items are in good shape when you buy the home, it’s always wise to budget for repair or replacement in the not-too-distant future.
Despite Some Negatives, Buying a Fixer Upper Is a Good Investment
The main benefit of buying a fixer upper is the fact that it gets the buyer into real estate affordably. Everyone has to start somewhere, so why not begin with a relatively low-cost homo? Be sure you completely understand fully what the property needs in terms of repairs and the cost of such repairs. Then, use the money you save buying the property for repairs and improvements. Other considerations include how old the home is, finding a reputable contractor to do the repairs, or doing the work yourself, which can take a lot of time and effort, along with plenty of money.
Finally, when you’re shopping for a fixer upper, be sure that the home is in a neighborhood that makes it worth spending your time and money. Find more advice in Part 2 of this article, which you’ll find below.
Buying a Fixer Upper – Part 2
Posted by RealEstate_Guru
As we discussed in Part 1 of this article, many home buyers, especially first-timers, don’t always consider the extra expenses related to purchasing a home, fixer upper or not. You need to study and be aware of both the costs and savings you might experience if you buy the property. For a fixer upper, that can be a substantial amount, so be especially careful not to under-estimate the costs. Renovation and repair expenses can mount up quickly, and leave you short of cash when you need it most. What’s the solution? Read on to find out.
Fixer Upper Buyer’s Checklist
Sure, you know the home needs work, but have you found all the problems it has? If you have any doubts, then get a professional inspection. This will make sure that you fully understand the all repairs, renovations and maintenance that the property needs. Consulting with an expert is the best way to do this. Once you have the inspection, you can get cost estimates from reliable contractors. Another thing to think about is the home’s age. If it’s very old, it’s likely to have more serious problems than a newer home. So, don’t be deceived by a homes vintage pedigree — it can cost plenty in both the short and long term, particularly with the home’s basic systems, such as plumbing and electrical. If you have your heart set on an older home, be sure to do your homework before buying.
Other Considerations
When you’re thinking about an older home, it’s wise to connect with contractors before buying, even if you plan to do some of the work yourself. A time certainly will come when you’re going to need expert advice, so it’s best to have your bases covered beforehand. That way, your experts can look at the home and give you advice and estimates before you buy.
Conclusion
Finally, be prepared to have plenty of patience during the process of buying and renovating a fixer upper. It’s likely that the progress will be slower than you expect and the problems will be greater. Taking time to properly repair and care for the home will ensure that it will be comfortable and also will increase in value over time.
Top Reasons to Buy a Home in 2013 – Part 1
Posted by RealEstate_Guru
If you’ve been on the fence about buying a home in 2013, there are more than a few reasons why you should. Read on to learn more.
Reason #1: Low Interest Rates
Mortgage loan rates are exceptionally low. In December 2012, the rate for a 30-year fixed loan averaged just 3.35%, which is startlingly lower than the 6% rate from just a few years ago. This means that you’ll save a bundle by purchasing now, before the rates go up, which they eventually will. The interest rate has a profound effect on how much home you can afford, and once rates increase, they’re likely to stay high for a long time.
Reason #2: Inflation Protection
If you’re renting, it’s likely that your landlord increases the rent from time to time to adjust for inflation. When you own a home with a fixed rate mortgage, you’ll have exactly the same payment for the life of the loan. You’ll never pay more, unless you want to.
Reason #3: Home Prices Won’t be Low Forever
Right now, there are plenty of bargains around for home buyers. It’s not going to be this way forever. There’s been a very slight up-tick in prices early in 2013, and if this trend lasts, home prices will continue to go higher. To get the most house for your money, the sooner you buy, the better.
Reason #4: Save on Taxes
Homeowners get a number of important tax deductions, including private mortgage insurance and real estate taxes. Even the points you pay on your mortgage loan are deductible. Owning a home is a great way to lower your overall tax bill by taking full advantage of all the deductions available.
Reason #5: A Feeling of Stability
Owning a home evokes a sense of permanence and stability, unlike renting. If you have children, they’ll make and keep friends, and get to stay in the same schools. Many renters change their residence every few years, which can be very unsettling for their families.
Reason #6: Building Equity
Having a mortgage is similar to an involuntary savings program. The money that you pay on the principal of your loan remains yours in the form of equity. Home ownership allows you to build up your own monetary value, not a landlord’s.
Still not convinced? Read Part 4 of this article (below) for even more reasons to buy a home.
Top Reasons to Buy a Home in 2013 – Part 2
Posted by RealEstate_Guru
Reason #7: Improved Social Life
When you rent, giving a party can create problems with neighbors complaining about noise. People in neighboring apartments are close enough to be bothered by the noise and music associated with a lively party. When you own a home, you have more privacy and more space to host any type of party you wish. Neighbors aren’t so close and so are less likely to complain.
Reason #8: A Sense of Pride
When you buy a home, you’re likely to feel a strong sense of pride and accomplishment. Your home is the physical result of years of hard work to save the down payment and qualify for a mortgage. This is likely to be the largest financial transaction you’ll ever make and it’s no small accomplishment. For many, it’s the realization of a long-held dream.
Reason #9: Ability to Make Changes and Improvements
Most landlords don’t allow tenants to make significant changes in their apartments. When you own a home, you can paint or wallpaper a room any in color you wish. You can landscape your yard to your heart’s content and even put in a pool if you wish. You’ll have an attic or basement (or both) that you can convert to extra living space. You can replace or upgrade the kitchen appliances. Add a garage, if you wish. The possibilities are endless!
Reason #10: Help Your Credit Score
If you make your mortgage payments on time, this will boost your credit score and demonstrate that you’re capable of handling a major financial responsibility. A good credit score effects much more than just your mortgage. It will help you get a better deal when buying a car and a better interest rate on credit cards. When it comes time to add some improvements to your home in later years, you’re likely to qualify easily for a home equity loan. Good credit is a powerful financial tool.
Reason #11: No Worry About Mortgage Rates
With rates at a historic low, it makes sense to lock in a low fixed-rate mortgage. Then, you’ll never have to worry about interest rates again, unless you refinance or buy another house.
Reason #12: A Sense of Community
As a homeowner, you’ll be part of a larger community of people who probably are a lot like you. This creates a strong sense of community that can be a valuable asset for you and your family. So, if there’s a homeowner’s association in your community or development, it makes good sense to join.
The Many Reasons to Buy a Home – Part 1
Posted by RealEstate_Guru
The 2013 outlook for the real estate market in the Raleigh-Durham region is very positive. So, if you’re thinking about buying a home, there couldn’t be a better time to get started. Are you a bit apprehensive? Relax! The more you know about buying a home, the less nervous you’ll be. In that spirit, we’d like to offer just a partial list of the best reasons to buy a home this year.
Reason #1 – Pride of Ownership
There’s nothing like the positive feelings you’ll experience when you own a home. It’s a matter of pride for many homeowners, who strive to keep their properties in top shape. Also, when you own your own home, you can decorate and furnish it as you please. Plus, you’ll enjoy more time outdoors working on your landscaping and garden. Having a home also gives owners and their families a sense of security and stability because it’s one of the best investments in the future that you can make.
Reason #2 – Appreciation
Speaking of investments, you should know that real estate consistently grows in value over the years. In fact, home values are monitored by the Office of Federal Housing Enterprise Oversight. This government entity then produces a housing price index that reports on changes in the market, organized by metropolitan area and region. So, it’s worth checking this when you’re house hunting. Finally, owning a home is considered by many to be an excellent hedge against inflation.
Reason #3 – Mortgage Interest Tax Deductions
Did you know that tax rates in the US favor homeowners? Home ownership is a great tax shelter, because as long as the balance you owe exceeds the value of your home, mortgage interest is fully tax deductible. In the early years of a mortgage, interest is the largest component of the monthly payment, so you’re sure to reap some financial benefits from owning a home.
Reason #4 – Property Tax Deductions
It’s a good idea to get a copy of IRS Publication 530 because it contains important tax information for first-time home buyers. The real estate property taxes paid for a first home and a vacation home are fully income tax deductible. In addition, some states have laws that benefit home owners, such as limits placed on property tax increases and assessments.
Reason #5 – Capital Gains Exclusion
If you have lived in your home for the past 5 years, you’re allowed to exclude up to $250,000 for an individual or $500,000 for a married couple from capital gains tax. There is no age restriction, which means that the over-55 rule does not apply. You can utilize these exclusions every 2 years, so technically you could sell every 24 months and make a tax-free profit.
(Continued in Part 2 below)
The Many Reasons to Buy a Home – Part 2
Posted by RealEstate_Guru
Here are 5 more important reasons to own a home rather than rent.
Reason #6 – Preferential Tax Treatment
If you make a greater profit than the allowable exclusion when you sell your home, that profit is considered to be a capital asset, provided you’ve owned the home for more than one year. Capital assets qualify for preferential tax treatment.
Reason #7 – A Reducing Mortgage Balance Enhances Your Credit Rating
Every mortgage payment is divided between an amount applied to the interest and an amount applied to the principal. Amortization is the process of paying off a loan in specifically calculated payments. This is done by dividing the principal (the amount borrowed after making the down payment) by the term of the mortgage in months. Then, interest is added, calculated at a specific percentage rate based on the length of the
loan, such as 15, 20 or 30 years. In the early years of a mortgage, a greater amount of every monthly payment is applied to interest than to principal. As a loan ages, more is applied to the principal than to the interest and your credit rating is likely to be enhanced.
Reason #8 – Owning a Home Builds Equity
Home equity is the difference between the amount you’ve already paid against the value of your home. To figure this, subtract your mortgage balance from the current market value of your home. For example, you will have $75,000 of equity if your home has been appraised for $200,000 and the balance you owe is $125.000. It is possible to “cash out” a home’s equity with a loan. Many people do so to reduce other, more expensive debt such as credit cards, which may have an interest rate as high as 22%. The interest rate on an equity loan is much lower and is tax deductible, so it’s a good vehicle for funding major home improvements or financing a college education.
Reason #9 – Exceptionally Low Mortgage Interest Rates
Just a few years ago, mortgage rates were above 6% for a 30-year fixed loan. In December 2012, they were hovering around 3.35% and are projected to hold steady. By buying when rates are low, you’ll save thousands in interest, which means your payment will be lower.
Reason #10 – Protection Against Inflation
If you’ve ever lived in a rental property, then you probably know that landlords tend to increase rent every year or two to keep pace with nflation. If you own a home and have a fixed-rate mortgage, your payment will stay the same for the life of the loan. So, you’ll never have to pay more, unless you choose to do so.
For more information about buying a home for the first time, be sure to consult with a licensed real estate professional.
Tips for First-Time Home Buyers – Part 1
Posted by RealEstate_Guru
Are you planning on buying your first home? If so then it’s an exciting time for you that’s fraught with concerns. This is likely to be the largest single financial transaction you’ll ever make, so it’s important to get it right. Working with a real estate agent is essential, but you need to do plenty of work on your own. Here are a few tips.
Check Selling Prices
Once you’ve decided on a neighborhood or area where you’d like to live, it’s time to find out whether you can afford to buy a home there. The place to start the process for many people is the Internet. Sites such as HomeGain.com and Zillow.com are great resources for market information. Your real estate agent should have detailed information that can supplement what you discover on your own. It’s also possible to do a quick search of MLS listings in the area you’re considering, such as on Realtor.com. We went to that site and typed “Raleigh NC” as a search criteria, and the site found over 2000 properties for sale. You can further refine your search with parameters such as price, number of bedrooms and square footage. Once you’ve narrowed your search, you’ll get a good idea of the range of prices in the area you’re considering.
Determine What You Can Afford
This can be tricky, but luckily, the Internet can help with affordability calculators such as that found at Bankrate.com. This site contains a number of pre-programmed calculators that can help you determine the costs associated with buying a home. Available calculators include: morgage payment calculator, loan and amortization calculator, cost of living calculator and how much house you can afford calculator.
Figure the Maximum You Can Afford
Also, it’s important to get a feeling for the maximum you should spend, and there’s a helpful calculator at Realestate.msn.com. This consists of a couple of worksheets to fill out that take into consideration other financial obligations that you may have. Taking a moment to do this will avoid the stress and even heartbreak associated with wanting to buy a specific home that you can’t afford. Using this calculator, you’ll also be able to figure your total monthly housing cost, which included items like homeowners insurance and applicable taxes. In some areas, the cost of taxes and insurance can nearly double your monthly mortgage payment, so it’s very important to do this calculation, which can add as much as $1500 per year or more to your mortgage payment. Finally, decide whether the house will fit into your budget. The Federal National Mortgage Association, also known as Fannie Mae, is a private corporation funded by the government that provides funds for mortgages, or a publicly traded security backed by it. Fannie Mae recommends that you not spend more that 20% of your annual income on housing costs.
[Continued in Part 2]
Tips for First-Time Home Buyers – Part 2
Posted by RealEstate_Guru
Here are a few more items and issues to consider when buying your first home.
Estimate Your Insurance Costs
To do this locate a property in the area where you want to live and call a local insurance agent for an estimate. This doesn’t obligate you, and will give you a good idea of what you’ll be required to pay. In addition, Zillow.com publishes property tax data for homes all over the US. Do be aware, though, that there are many local details and intricacies related to home insurance, so there may be differences in what the seller currently is paying and what a new owner can expect to pay.
Determine Your Closing Costs
Closing costs can add up to a substantial sum, so shouldn’t be overlooked. What’s included in closing costs? Items like the lender’s loan origination fees, title fees, settlement fees, taxes and prepaid costs like homeowners insurance or homeowners association fees. Find information on average closing costs in your areas by looking at Bankrate.com’s annual survey.
Get a Feel for Real Estate Values in the Area
Here’s where working with a real estate agent can be very helpful. These professions can give you a good idea of cost and value trends in the area you’re considering. In other words, your agent can tell you whether prices will continue to rise or fall, or whether they’ve topped out or bottomed out. You’ll need to look a the big picture here. Yes, buying a house is a great way to build wealth, but you should consider other factors as well, such as unexpected costs for major repairs, such as to a roof or plumbing. You also might need to replace major appliances, so be sure to budget for that as well.
Finally, consider whether you’re ready, emotionally and financially, for the expense and effort of home ownership before you begin the buying process.
Exploring Raleigh’s Districts – Part 1
Posted by RealEstate_Guru
There’s never a shortage of things to do in the Raleigh area. One thing many people enjoy is exploring the city’s many districts. Downtown Raleigh has a number of interdependent districts. Here’s some information about a few of them.
The Fayetteville Street District
This district is considered by many to be the central business district of downtown Raleigh. It’s known for its skyscrapers and has a high density of historic buildings that attracts visitors all year round. The district is loosely defined by Morgan Street to the north and Martin Luther King Avenue to the south. Also known as “North Carolina’s Main Street,” Fayetteville Street has undergone a remarkable transformation that began in the past decade. In 2006, the first phase was completed when the pedestrian mall was renovated and developed into a traditional street, complete with outdoor cafes, public art and extra-wide sidewalks. There’s also an inspiring vista between the North Carolina state capital and the Progress Energy Center for the Performing Arts.
The Moore Square District
A beautiful urban park is part of this district. The park is bounded by Hargett St., Blount St., Martin St., and Person St. It’s regarded as Raleigh’s hub for arts and cultural entertainment. Attractions include art galleries, the Marbles Kids Museum/Wells Fargo IMAX® theater and Artspace. These and other sites surround the park’s beautiful oak trees and wonderfully landscaped gardens. Many regard the Moore Square district to be downtown Raleigh’s arts center. The district is rich with restaurants and clubs that offer a remarkable array of dining and entertainment experiences. City Market, one of
downtown Raleigh’s historic treasures, is located to the south of Moore Square Park. It offers a trendy array of retail shops and restaurants in a cobblestone-accented environment that hearkens back to times long past.
Glenwood South District
If you’re seeking a trendy and hip district, then Glenwood South is well worth visiting. It’s full of restaurants with progressive, avant garde atmospheres and itself has a unique character that’s unmatched. Glenwood South is the place to be seen on warm summer evenings in downtown Raleigh. Formerly a warehouse district, the area now is a destination for those who enjoy nightlife. The district’s transformation also includes a plan to attract permanent residents with condos and apartments that will help to sustain the area’s vitality of many years to come.